United States leadership in debt forgiveness

(a) Report to the Congress Within 180 days after the date of the enactment of this Act, the Secretary of the Treasury shall submit to the Committee on Financial Services of the House of Representatives and the Committee on Foreign Relations of the Senate a written report that contains an assessment of— (1) the commonalities in successive debt-restructuring challenges across the frameworks and forums in which the United States participates, such as the types of debt relief that countries are able to provide, the terms of debt relief, and the reclassification of public debt as private debt by certain creditors; (2) the options available to provide debt relief to developing countries with an intransigent creditor while protecting United States taxpayer resources and ensuring that United States taxpayer money is not being used to fund payments to intransigent creditor nations; (3) the oversight and policy priorities of the United States in the negotiations in the debt-negotiation forums in which the United States participates; (4) the likelihood that low-income developing countries can gain or retain access to private capital markets even if the countries are in default on debt owed to sovereign creditors, and how to increase that likelihood; and (5) the implications for the economic and national security interests of the United States of the extent to which the debt of developing countries impedes or prevents the countries from taking on additional debt to finance future projects. (b) Advocation for integration of certain elements in the IMF review of the Debt Sustainability Framework for Low-Income Countries The Secretary of the Treasury shall instruct the United States Executive Director at the International Monetary Fund to use the voice, vote, and influence of the United States to strongly advocate for the integration of the following elements in the review by the Fund of the Debt Sustainability Framework for Low-Income Countries: (1) Making informing debt restructuring processes an explicit purpose of the Framework. (2) Increasing the transparency of macroeconomic assumptions used to inform sustainability estimates and the rationale for the assumptions, including for projected gross domestic product, exports, fiscal balance, fiscal balance financing, and expected debt restructuring. (3) Including investments identified in national plans to meet the Sustainable Development Goals and the Nationally Determined Contributions under the Paris Climate Agreement in the fiscal balance projections and the impact of the investments on economic growth. (4) Ensuring that when debt restructuring is needed, it is sufficient to lower such country to no more than a moderate risk of debt distress even in medium-term stress scenarios. (5) Increasing the severity of stress scenarios to counteract the historical optimism bias of the Framework. (6) Adding the ratio of total (external plus domestic) public debt service to government revenue, as an indicator of debt sustainability.